Samsung expects second-quarter profits to miss analysts estimates

Samsung warned in April that second-quarter profits in its mobile business should decline sequentially.

Sarah Tews/CNET

Samsung expects its second-quarter profit growth to be its lowest in more than a year, amid reports of lackluster sales of its flagship Galaxy S9 smartphones.

The Korean electronics giant said Thursday that it expects to record an operating profit of 14.8 trillion Korean won ($13.2 billion) for the three-month period ended June 30, an increase of 5 percent over the year-ago-period. The forecast is slightly below the 14.9 trillion won analyst average estimate in a Thomson Reuters poll.

Revenue likely came in at 58 trillion won ($51 billion), a decrease of nearly 5 percent from a year earlier. The guidance, released Wednesday ahead of full earnings later this month, didn't provide specific divisional results.

The smartphone market has been slowing down in recent quarters. It's become harder for handset vendors to make huge changes in their devices and differentiate from one another. Prices for the latest and greatest phones have actually increased at the same time US carriers have gotten rid of subsidies. All of that's meant people are waiting longer to upgrade.

Samsung launched the Galaxy S9 and S9 Plus in March to reviews characterizing it as a nice incremental upgrade from the Galaxy S8 but not a game-changer. Also, some of its new features fell far behind those offered on the Apple iPhone X.

Analysts have expected Samsung's smartphone sales to drop in the quarter, according to Reuters, after reporting a slowdown in demand for its newest phones in the first quarter. The company warned in April that its second-quarter profits in its mobile business should decline sequentially "due to stagnant sales of flagship models amid weak demand and an increase in marketing expenses."

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